Scientific evidence is irreversibly mounting regarding the need to reduce greenhouse gas (GHG) emissions and to adapt to the inevitable changes already under way. How much climate change mitigation is needed, when these initiatives should be implemented and who should shoulder the burden are the core issues of many academic and policy debates. Consensus among most scientists is far from settling these debates. This ‘arguable agreement’ among the scientific community has nevertheless helped make the climate change debate more important in the policy agenda, albeit to a limited extent. The present paper will introduce the debate with respect to action taken to mitigate climate change, its characteristics and challenges in the context of global, EU and Spanish actions.
The recent publication of the Stern Review (SR) and the fourth assessment report (AR4) by the Intergovernmental Panel on Climate Change (IPCC) has attracted much attention. Their damage estimates along with the increasing certainty of the anthropogenic nature of GHG emission concentrations have been scrutinised in academic and policy arenas. Despite criticism, the main results presented by the SR have been backed by some of the leading experts in the climate change (CC) field as well as by the International Energy Agency. The salient issues regarding climate change as well as the main debates will be analysed in the first two sections of this paper.
The leading role of the EU in CC negotiations as well as current proposals will then be advanced as well as Spain’s disappointing trend in GHG emissions since 1990. Spain’s strategy regarding CC will be analysed and further specific targets will be suggested for future policies. The role of the US, China and India will be discussed as a necessary add-on to CC negotiations to manage a global public good, a stable climate. A fair burden-sharing agreement and the use of issue linkage coupled with the damages of CC will be presented as the main motives for a fruitful global CC agreement.
Background: Framing the Issue and Some Recent Data
Global climate stability, with variability in temperatures within a given range, is a public good, moreover, a global public good. It is non-rival (one’s enjoyment does not diminish another person’s enjoyment) and non-excludable (we cannot preclude anyone from enjoying a stable climate). The existence of climate change is defined by the Intergovernmental Panel of Climate Change (IPCC) as ‘any change in climate over time, whether due to natural variability or as a result of human activity’ (http://www.ipcc.ch). The driving forces behind climate change are to be found in an unprecedented increase in the concentration of GHG (mainly CO2, N2O, CH4, HFCs, PFCs and SF6) in the atmosphere. The recently released Assessment Report (AR4) by the IPCC acknowledges the continuous rise in GHG concentrations compared with pre-industrial levels. This increase has been especially significant (70%) from 1970 until 2004. The energy sector, the transport sector, land use change, forestry, agriculture and the residential sector are the main contributors to this sharp increase.
Climate change gives rise to external effects which imply a divergence between the private costs of emissions and the social costs of emissions that reduce economic efficiency. The absence of property rights over the atmosphere shapes the outcome of emission trends, reinforcing the market’s failure regarding this global common good. The lag between emissions and their consequences along with the regional distribution of damages has made mitigation and adaptation policies a reactive response rather than a proactive one.
The consequences of climate change vary from one country to another and within countries. They include, among others: higher temperatures, rising sea levels, a higher frequency of extreme weather events, biodiversity loss, reductions in glacier surface, increases in the probability of infectious diseases and increased migration. The picture, however, is not necessarily gloomy for every country and a 2º-3ºC temperature increase due to higher concentrations of GHG in the atmosphere will mean higher agricultural yields, decreases in cold-related mortality and reductions in the heating needs for Northern countries. But even with this limited increase in temperature, both developing countries and developed countries in lower latitudes will be adversely affected. These countries will experience more frequent and severe storms and hurricanes, coupled with changes in rainfall patterns, increasingly frequent heat waves and related deaths and damages to climate-dependent activities such as tourism and agriculture (Stern et al., 2006).
The recently released Assessment Report (AR4) by the IPCC provides a fuller account of the effects of CC. An illustrative summary of the main consequences of climate change are shown in Figure 1 below.
The main consequences are projected from a set of scenarios (known as SRES or Special Report on Emission Scenarios) chosen by the IPCC to illustrate a set of possible outcomes given different possibilities of economic growth, development, degrees of convergence, population trends and technological paths. Under these potential scenarios, as GHG concentrations increase the consequences of increased temperatures worsen (see Figure 2).
The EU can also expect its share of climate-change-related events if GHG emissions continue to accumulate. These would include temperature increases of between 4º-7ºC for this century. Past GHG emission trends in the EU have resulted in increased extreme-weather events (flash floods, heat waves such as the one suffered in 2003, biodiversity loss, diminishing glaciers and droughts). These events are costly to the EU and the lower-bound estimate of annual damages amounts to €8.5 billion (http://europa.eu).
The main consequences for Spain, as depicted by the Spanish Office for Climate Change (OECC), include greater temperature variability, a reduction in water availability, more frequent fires, increases in energy demand, alterations in terrestrial and marine ecosystems, mixed effects regarding agricultural yields, biodiversity loss and adverse effects to the Spanish fishing and tourism sectors, among others. Figure 3 below depicts a more comprehensive account of the effects on different issues in Spain:
|Climate||Larger and more frequent temperature anomalies. Temperature increases (estimates of 0.4ºC in the winter and 0.6ºC in the summer per decade) which will affect inland areas to a greater extent.|
|Rainfall||Significant reduction. For every 1ºC temperature increase there is an estimated 5% decrease in rainfall. This trend is aggravated as GHG emissions rise.|
|Terrestrial ecosystems||Mixed effects: increases in temperature. The Atlantic region could increase land productivity whereas the Mediterranean region, with higher temperatures and scant water resources, could experience reductions in land productivity. Islands and isolated ecosystems will be more vulnerable.|
|Continental aquatic ecosystems||Could be transformed from permanent to seasonal with some aquatic ecosystems disappearing. Reduction in biodiversity. Alteration of biogeochemical cycles. Knock-on effects will be felt in tourism, civil defence services, water supply and continental fishing.|
|Marine ecosystems, fishing sector and coastal zones||Reduction in productivity. Possible increase in sea level between 50cm and 1m by the end of the century. River deltas and coastal areas in the Cantabrian region will be the worst-affected areas.|
|Biodiversity – Flora||The northern part of the peninsula will become more ‘Mediterranean’ and the south will become more arid. Changes in fire patterns and sea-level rise for coastal vegetation. Biodiversity loss.|
|Biodiversity – fauna||Biodiversity loss that can affect endemic species. Possible shift in species towards the northern parts of the Peninsula.|
|Water resources||Reduction in water resources and increases in demand due to crops that grow on irrigated land.|
|Soil||Current desertification, erosion and salinisation of soils will be aggravated.|
|Forest||Changes in the physiology of forest species.|
|Agriculture||Mixed effects: higher temperatures offset by greater photosynthesis. Milder winters enabling greater productivity in the colder seasons. Increase in water demand, mainly in the south and south-east of the country. Livestock grazing and intake will be negatively affected.|
|Energy||Estimated increase in electricity demand that will be satisfied without increases in hydroelectric power. Increase in demand for oil and gas and reduction in biomass input. Increase in solar power potential due to more hours of sunshine.|
|Tourism||Change in tourism areas. Some of the locations could be negatively affected due to sea-level rises and water shortages. Travel plans could experience seasonal variance as well as variance in the number of days spent in Spain.|
|Insurance||Possible increase in insurance premiums due to the higher frequency of climate-related disasters.|
|Risks||Rise in fluvial levels in the Atlantic, Mediterranean and inland areas. Mountain landslides that can cause damages of hundreds of millions of euros per annum affecting transport infrastructure and population (although to a lesser extent). Forest fires will increase in intensity. The ‘fire season’ will be extended. Higher mortality and morbidity rates due to heat waves.|
The severity of these effects increases as GHG concentrations rise. Whether strong and early action is a must is a subject of intense debate. Views in favour and against immediate and significant GHG reductions will be discussed in the following sub-section.
The Debate: Cherry-picking Alarmists or Time to Eat at the Table
So far a succinct summary of the recent data on the potential effects of climate change has been presented. The picture, however, is not as clear cut as the one depicted above and, as advanced in the previous sections, there are widely differing views on ‘scientific evidence’, the need for and extent of mitigation, the numbers behind the estimates, ecosystem limits and adaptation possibilities, among others. In this sub-section the main debates surrounding the published Stern Review, which claims that ‘the benefits of strong, early action on climate change outweigh the costs’ (Stern et al., 2006, i), will be briefly discussed.
The exchange of criticisms and counter-arguments with regard to the analyses undertaken in the Stern Review (SR) can be followed in various issues of World Economics since mid-2006. The science behind the latest data available in the SR has been criticised for taking temperature-rise estimates and the related consequences of higher concentrations of GHG published by the IPCC for granted, casting doubts on the real temperature increase and the SRES scenarios used by the IPCC and on which the SR’s claims are based. The SR is criticised for being biased in its conclusions and one-sided in order to be ‘policy relevant’ (Carter et al., 2006). Peer review processes are also criticised and technical innovation and adaptation are said to be ignored by the SR. Whether CC is human induced is further questioned even though the IPCC 2007 report states that ‘most of the observed increase in global average temperatures since the mid-20th century is very likely due to the observed increases in anthropogenic greenhouse gas concentrations’ (SPM-WGI, IPCC, 2007, p. 10).
Both the SR team and others such as Gilkson (2007) have assessed these claims and have pointed out that the main criticisms regarding the scientific basis used in the SR are unfounded and that no alternative data or explanations have been presented to back up this scepticism. Uncertainty and data gaps are common currency in science. Debunking the consensus needs more than stating that the results are outliers and that nothing is really happening with climate. In any case, Stern recognises the inherent uncertainty in the extent of CC consequences. Further data-collection efforts and modelling analysis in the future will undoubtedly polish results and reduce uncertainty. However, data on complex and interrelated ecosystems on which life on the planet is based will most likely never be certain. Even if central estimates of potential damages of climate change do not include ‘extreme, abrupt and dangerous climate change scenarios’ (Stern, 2006b, p. 155), factoring a wide set of outcomes within the possible scenarios is arguably desirable from a policy perspective, if only for the insurance value society will derive from this.
The response to climate change can be threefold: (1) mitigation (ie, reduce/abate GHG emissions); (2) advance climate engineering innovation; and (3) adaptation (invest in defensive measures). The specific weight of each option in the policy mix will depend on what is politically feasible and socially acceptable. Decisions regarding what to do about climate change will be shaped by the fact that the benefits from mitigation are uncertain and felt in the future while the costs of mitigation are certain and immediate. From an economic perspective, abatement should take place until marginal damages of GHG emissions equate the marginal cost of abatement. This will bring efficiency and thus maximise the net welfare to society. If only things were so simple. Again, uncertainty riddles decisions and both policy options (interventionist and non-interventionist) and outcomes are context specific. The existence of irreversible damages (such as biodiversity losses) further complicates the decisions made and thus choosing the appropriate level of mitigation and adaptation policies is by no means a simple task. In these situations precautionary approaches have been suggested but these have nonetheless been criticised for imposing an arguably excessive cost on present generations for the sake of future and possibly wealthier generations. Regarding this issue, the SR concludes that the costs of early action are less than those of delayed policy decisions as mitigation and adaptation will be more expensive in the future.
The numbers behind the estimates used in the SR (the analysis of the costs and benefits of different policies) have also been controversial. Critics have argued that the data used is biased and one-sided, discount rates used are too low, uncertainty is unaccounted for and the costs of CC have been overestimated while the costs of mitigation and adaptation to CC have been underestimated. The SR team, and advocates of their work, have argued that conclusions on CC have been backed by the IPCC 2007 estimates and by the International Energy Agency. The SR has included the latest data available regarding CC and has assessed the following: probabilities of ‘high climate-change impacts’; a broad range of impacts including non-market impacts; catastrophic changes whose likelihood increases as temperatures rise; risk and uncertainties have been accounted for and although these are unresolved issues, best guesses have been analysed in the report. Finally, explicit ethical judgements acknowledged in the SR regarding future generations plus sensitivity analyses show a broad range of situations including various discount rates. In any case, any model is sensitive to the assumptions made and the SR team warns readers and policy makers alike that one should be cautious when interpreting their results.
Improved models, estimates and data will undoubtedly be under way in the near future. The existence of scope for improvement is a weak reason to dismiss sound analysis from leading experts in the field. Options on how to give mitigation and adaptation a place under the sun will come from broad and reaching agreements fostered by further R&D as well as from ongoing negotiation efforts. Rather than being part of the menu of climate change, it is time to sit at the table with major emitters and mitigate and adapt in the most cost-effective manner. Delaying action will most likely become increasingly costly.
The EU and Spain: Worthy Efforts in Need of Permanent Policies and Specific Targets
The EU’s leading role in climate change negotiations is a long-term commitment. Its participation and leadership in international conferences such as the UNFCCC and the Kyoto Protocol (KP), EU Directives that have later been transposed to EU members’ legislations, the European Emission Trading System (EU-ETS) and a further unilateral CO2 target reduction of 20% at theMarch (2007) Summit, among other initiatives, signal a clear path for EU policy makers and citizens. There are, nevertheless, many challenges lying ahead if we are to reap the fruits of this prolonged leading role. Meeting KP’s commitments, ensuring participation and avoiding free-rider incentives of tomorrow’s main polluters, bringing the US on board in the post-Kyoto agreements and promoting efficient technology will be the basis for a low-carbon future.
The EU’s belief in the anthropogenic nature of GHG concentrations and the increasing damage they cause is said to be founded on ‘overwhelming scientific consensus’ (http://ec.europa.eu/environment/climat). The main message is that climate change is here to stay and that limiting CC to an acceptable level (2ºC) requires urgent action now. EU proposals for action include an ongoing reduction of GHG emissions on behalf of developed countries. Energy policies are to ensure both improvements in energy efficiency and a 20% increase in the use of renewable energies by 2020, aside from promoting carbon capture and storage (CCS). The EU-ETS has to be strengthened (ie, made indefinite and compatible with other existing trading schemes) and broadened (to include other highly polluting sectors, such as transport and residential which are currently excluded from the trading system). Investment in R&D is the final cornerstone for the EU’s actions, which has been advanced by the 7th Framework Programme (2007-13). This investment effort is also encouraged beyond 2013 by the EU. Thus National R&D budgets are expected to follow suit and invest in these initiatives.
Spain’s record in meeting its KP targets has been disappointing until 2005. Economic growth and increases in population have driven Spain’s GHG emissions up (see Figure 4). Insufficient efforts in mitigation and energy efficiency strategies have resulted in increases in GHG emissions of 52.2% (440,649 Ktons of CO2e) compared with the base year (289,599 Ktons of CO2e). According to Spain’s commitments to the KP, it was allowed to increase CO2 emissions by 15% over base year emissions. Spain’s emissions, however, have been constantly on the rise until 2005. Official figures for 2006 are not yet available but are expected to be better than those of 2005. The available data is summarised in Figure 4.
The Spanish Strategy for Climate Change and Clean Energy published earlier this year points to the main areas in which action is ongoing. These include the development of a legal framework and institutions for participating in the EU-ETS and participation in KP’s flexible mechanisms mainly through project development in Latin America (and other countries with which Spain has stronger ties and interests). Plans have been designed to reduce the contribution of energy to GHG emissions (being responsible for 78.21% of Spain’s emissions in 2004) via public investment of €729 million. Renewable energies are being boosted from the public sector with over €8,400 million. The residential sector has also seen the approval of a new building code (Código Técnico de Edificación RD314/2006, published on 17 March 2006) which is expected to reduce energy consumption in buildings by 40% compared with current building energy needs.
Much seems to have been done, but there is a long way to go before our climate change mitigation goals are met. The guiding principles of this strategy come across as vague. The quantitative targets for each of the measures and indicators are not included in the strategy. Monitoring progress for each individual measure and indicator will therefore be difficult and solving deviations from targets may thus be a random achievement. Priorities need to be clerly marked and actions should be taken whenever they are cost-efficient, provided domestic efforts are at the forefront of these measures.
A Spanish adaptation plan has also been developed. The plan focuses on biodiversity, hydrological impacts, forests, agriculture, tourism, fishing and marine ecosystems, industry and health, among others. This is indeed a good start that acknowledges informational needs and provides a clear account of the main areas where action will need to be taken. The logical next step for this plan will be to define what to do when the data confirm damages, who will bear the cost of adaptation and how institutional cooperation among competing departments and regions will be articulated.
One Step Further: Broader and Deeper Agreements in the Oven?
Climate change mitigation and adaptation is becoming an unavoidable and costly issue. The developed countries are responsible for the largest part of the GHG emissions. The developing countries will be the first to suffer the damaging consequences of current GHG concentrations. On ethical grounds it is arguably justified that developed countries should be the ones reducing GHG emissions at present. It may be not only morally right but also a wise insurance policy. Leading the way to a low carbon future will send a clear signal: that the developed countries are concerned about inter- and intragenerational equity. As developing countries such as China and India become main emitters (due to their population and economic growth), past mitigation and abatement efforts on behalf of developed countries to limit damages coupled with the developing countries’ increasing risks, could motivate a shift towards a global cap on GHG emissions.
The need to bring the US into climate change negotiations, as the current single most polluting developed country, is also highly desirable due to its R&D potential and geopolitical weight. The latest agreement at the G-8 summit in Heiligendamm is a first step in the right direction. Critics have pointed to the need for far stronger commitments than sitting at a negotiating table and agreeing to start thinking about GHG emission reductions. International Environmental Agreements (IEA’s) with many countries at different development stages make broad and deep agreements a great challenge that will need time to thrive.
In order to make IEA’s work, the costs and benefits of adhering to these agreements have to be shared fairly. Countries will not engage in actions that are not beneficial to them. The amount of information we have on the damages of CC and the costs of abating, substitutes and available technology will determine which actions will be taken in the future. Issue linkage (through trade or technology transfers, for instance) can make agreements attractive for those who are currently more concerned about economic growth. Past experience paints a mixed picture of the success of IEAs. This is a reason to keep negotiating in order to overcome sub-optimal solutions that will at best bring warming closer and sooner. Worldwide institutional frameworks designed to articulate and implement climate agreements are currently non-existent. In the absence of a World Environmental Organisation, the EU’s historic leadership is welcome, and future negotiations will benefit from every country’s efforts.
Despite healthy scepticism and doubts, an overwhelming consensus defines climate change as an unequivocal phenomenon which is very likely to be caused by anthropogenic factors. Uncertainty regarding the estimates of damages and costs of action is not likely to be fully resolved. This, however, is a feeble excuse for inaction considering the potentially irreversible damage. The question remains as to how much action should take place and how to share the burden and the opportunities of a low-carbon future. Going for comprehensive insurance versus third-party insurance is the decision lying ahead. This decision, however, depends on all major parties at the negotiating table as a stable climate is a global public good requiring long-term and fair international agreements.
The EU’s leading role in climate change negotiations has been enlightening and continuous. Meeting targets, verifying emissions, funding research to reduce uncertainty and attracting the US, China and India will be fundamental in order to ensure that climate change remains within the 2ºC increase. In the EU, the southern countries such as Spain are the expected net losers from global warming.
Spain’s GHG emission trend has been increasing until 2005. Population and economic growth have driven emissions up and policies to mitigate this trend have been insufficient. The latest policy developments (the Spanish Strategy for Climate Change and Clean Energy, the new building code approved and the Spanish adaptation plan) aim to meet Spain’s commitments. Clear target setting and monitoring requirements are largely absent and future strategies should include them in order to provide transparent and accurate information on Spain’s performance. Failure to look ahead and abroad could entail excessive risks that will reduce future development.
Byatt, I. et al. (2006), ‘The Stern Review “OXONIA Papers”: A Critique’, World Economics, vol. 7, nr 2, p. 145-150.
Carter et al. (2006), ‘The Stern Review: A Dual Critique’, World Economics, vol. 7, nr 4, p. 165-232.
Dietz, S. et al (2007), ‘Reflections on the Stern Review (1), A Robust Case for Strong Action to Reduce the Risks of Climate Change’, World Economics, vol. 8, nr 1, p. 121-168.
Gilkson, A. (2007), ‘Climate Change. A Response to “The Stern Review”: A Dual Critique’, World Economics, vol. 8, nr 1, p. 233-238.
According to the Third Assessment Report by the IPCC the SRES scenarios include:
A1. The A1 storyline and scenario family describes a future world of very rapid economic growth, global population that peaks in mid-century and declines thereafter, and the rapid introduction of new and more efficient technologies. Major underlying themes are convergence among regions, capacity building and increased cultural and social interactions, with a substantial reduction in regional differences in per capita income. The A1 scenario family develops into three groups that describe alternative directions of technological change in the energy system. The three A1 groups are distinguished by their technological emphasis: fossil-intensive (A1FI), non-fossil energy sources (A1T) or a balance across all sources (A1B) (where balanced is defined as not relying too heavily on one particular energy source, on the assumption that similar improvement rates apply to all energy supply and end use technologies).
A2. The A2 storyline and scenario family describes a very heterogeneous world. The underlying theme is self-reliance and preservation of local identities. Fertility patterns across regions converge very slowly, which results in continuously increasing population. Economic development is primarily regionally oriented and per capita economic growth and technological change more fragmented and slower than other storylines.
B1. The B1 storyline and scenario family describes a convergent world with the same global population, that peaks in mid-century and declines thereafter, as in the A1 storyline, but with rapid change in economic structures toward a service and information economy, with reductions in material intensity and the introduction of clean and resource-efficient technologies. The emphasis is on global solutions to economic, social and environmental sustainability, including improved equity, but without additional climate initiatives.
The B2 storyline and scenario family describes a world in which the emphasis is on local solutions to economic, social and environmental sustainability. It is a world with continuously increasing global population, at a rate lower than A2, intermediate levels of economic development, and less rapid and more diverse technological change than in the B1 and A1 storylines. While the scenario is also oriented towards environmental protection and social equity, it focuses on local and regional levels.
An illustrative scenario was chosen for each of the six scenario groups A1B, A1FI, A1T, A2, B1 and B2. All should be considered equally sound.
The SRES scenarios do not include additional climate initiatives, which means that no scenarios are included that explicitly assume implementation of the United Nations Framework Convention on Climate Change or the emissions targets of the Kyoto Protocol.’
 CO2e is the quantity of GHG multiplied by its global warming potential. It is considered the standard damage comparison unit for GHG.
 ppm means parts per million, that is, the ‘ratio of the number of greenhouse gas molecules to the total number of molecules of dry air’ (http://www.ipcc.ch).
 For a summary of the basic legislation on climate change please refer to http://www.mma.es/portal/secciones/cambio_climatico/documentacion_c c/normativa_cc/.
 One of the main market-based instruments promoting the flexible and cost-efficient achievement of CC commitments under the Kyoto Protocol is the tradable permit system. Companies of certain economic sectors (see the Directive 2003/87/CE for further details) are allocated a given number of permits and these are traded according to the company’s abatement cost structure and the price of the permit in the market. The broader reach of the sectors will increase cost efficiency of the EU-ETS and negotiations in this area are in the make.
 Note however that there are numerous unresolved issues with the CCS proposal due to safety storage and the fact that it is a partial and local solution (Helm, 2007, pers. comm.)
 According to the Royal Decree RD1866/2004 the base year for CO2, CH4 and N2O is 1990. The base year for HFC, PFC and SF6 is 1995.